State minimum wage increasing to $11 in new year

When the Massachusetts minimum wage increases to $11 per hour on Jan. 1, it will be among the highest in the nation, but that won't last long.

Gerry Tuoti Wicked Local Newsbank Editor

When the Massachusetts minimum wage increases to $11 per hour on Jan. 1, it will be among the highest in the nation, but that won’t last long.

“California and New York State have passed bills to raise their minimum wage to $15,” said Andrew Farnitano, a spokesman for Raise Up Massachusetts, a coalition of labor unions, community organizations and religious groups advocating for a $15 minimum wage. “This is something where Massachusetts has historically been at or near the front of the country, and I think we’re in danger of falling behind again if we don’t continue to raise wages.”

Seven other states have plans to raise their minimum wages to even higher levels in the coming years, including New York, which will raise the hourly minimum wage for New York City to $13 next December, then to $15 effective Dec. 31, 2018. California’s minimum wage will go to $11 in January 2018, then increase by $1 each year until hitting $15 in 2022.

Colorado, Oregon, Arizona, Maine and Washington state also have plans to increase their hourly minimum wages above the Bay State’s $11 mark.

The District of Columbia is set to raise its highest-in-the-nation $11.50 minimum wage to $12.50 effective July 1, 2017.

Raise Up Massachusetts plans to file a bill in January to gradually raise the state minimum wage to $15.

Massachusetts lawmakers in 2014 voted to incrementally raise the state minimum wage, which was then $8 an hour, to $11 by Jan. 1, 2017. The wage rose to $9 in 2015 and $10 in 2016.

The last time Massachusetts adjusted its minimum wage was 2008, when it rose from $7.50 per hour to $8.

The federal minimum wage is $7.25 per hour. States with no minimum wage automatically default to federal level.

In 2014, the nonprofit Massachusetts Budget and Policy Center estimated there were 473,000 workers statewide who earned less than $11 per hour.

Raising the minimum wage to $11 in increments was a more modest expansion that businesses could plan for, but a jump to $15 would be a “quantum leap,” said Chris Geehern, executive vice president for marketing and communication at Associated Industries of Massachusetts.

He explained how wage compression would impact employers and workers. A veteran employee of a company making $15.50 per hour, more than $4 above the 2017 minimum wage, would suddenly find herself making just above minimum wage, Geehern said.

“If I have a bunch of employees making $15.50 an hour, all of a sudden I’m going to probably have to increase their wages as well,” he said.

Some entry-level jobs, Geehern said, would likely be priced out of the market.

“It is both emotionally appealing and politically expedient. People argue it’s one way to address income inequality, but the problem is it doesn’t work,” Geehern said. “From our perspective, it’s a distraction to addressing the real economic impediments preventing all Massachusetts residents from sharing in the state’s prosperity.”

An education system that does a better job of producing graduates with in-demand skills would be a more effective long-term solution to closing the income gap, Geehern said.

Jon B. Hurst, president of the Retailers Association of Massachusetts, said the wage increases are difficult for some employers to afford.

“This is the third step of a dollar increase each year,” Hurst said. “It’s a 38 percent increase over three years, which is not insignificant.”

Small retailers in particular feel the effects of the wage hikes, he said.

“Every time it goes up, you have a lot of pressure to raise the other wages right on up the ranks, raising insurance costs and payroll taxes,” Hurst said. “And this is all at a time when inflation has been remarkably low and sales have maybe been around the level of inflation.”

Farnitano pointed to a decreasing unemployment rate as a sign that raising the minimum wage hasn’t harmed the economy. Higher wages, he said, mean workers have more money to spend back into the local economy.

“We’re a high-cost-of-living state,” he said. “A minimum wage of $11 isn’t enough, even for a full-time worker, to pay their bills and make ends meet. It’s only $22,880 a year.”

A worker paid $15 per hour would earn $31,200 in a year.

Hurst called for lawmakers to take steps to help small businesses remain competitive, such as allowing a separate minimum wage to teen workers and abolishing the blue laws that require retailers to pay time-and-a-half wages on Sundays and holidays.

“For 58 days a year, the minimum wage on retail stores doesn’t go to $11; it goes to $16.50,” Hurst said. “If you go to $15, that would be $22.50. It’s absolutely impossible to be in the black on those days for local stores, and at that point, you’d see our Main Streets absolutely dry up and go dark.”